Employee Organization in Silicon Valley: Networks, Eti4c Organization, and New Unions

EMPLOYEE ORGANIZATION IN SILICON VALLEY: NETWORKS, ETI4C ORGANIZATION, AND NEW UNIONS Alan Hydet Was the software and marketing company that I shall call Individuate one of America's one hundred best places to work in early 2000?' Its human resources director, whom I shall call Farah, certainly thought it could be, and so did many of its employees. Its analytic software, which analyzed customer behavior during online and offline shopping, was very successful. Individuate had successfully merged two very different companies to develop the product. Originally a San Francisco marketing company catering to retailers, Farah told me later, it was full of "hip, stylish people from marketing and advertising, dressed in black." In 1999, they realized that they needed to merge with a database company and chose an East Bay firm named after a character from Egyptian mythology. The database company was "full of kids wearing t-shirts and jeans" and snobbish about their degrees from M.I.T., Cal Tech, and Stanford. Nevertheless, the merger had worked out great-only two of the East Bay kids had quit, because they did not want to commute into the city-and after the get-acquainted parties, Bay cruise, and community-building, everybody now "loved the new company." Business was great, salaries were high, and benefits were generous-including stock options, full medical and dental coverage, a 401(k) plan, free snacks and drinks, a recreation room, and reduced rates on gym membership. Like every other information technology or software company in the Bay Area that year, the merged company was hiring all the time. Executive management thought that it might help hiring and retention to have the t Professor and Sidney Reitman Scholar, Rutgers University School of Law, Newark. This article is adapted from Chapter Five of the book, WORKING IN SILICON VALLEY: ECONOMIC AND LEGAL ANALYSIS OF A HIGH-VELOCITY LABOR MARKET, to be published in 2002 by M.E. Sharpe, Inc. A. Hyun Rich provided research and editorial assistance in the preparation of this Article. 1. The Individuate story comes from an interview with its former personnel director on August 1, 2001. The company's name, the personnel director's name, and many details about the company have been changed. 494 U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW [Vol. 4:3 company recognized widely as a great employer, perhaps by being named a "top company to work for" by business media. Farah looked into it and learned that to make these lists, Individuate would have to show that it was genuinely meeting employee demands. Therefore, Farah called open meetings to find out what the staff wanted. The chief demand was for further professional development and training. "The engineers wanted classes in software skills. The sales people and customer support staff wanted to know more about engineering." A small volunteer group formed to work up a plan, and Farah met with them weekly. Consultants had warned that it would be dangerous to raise expectations, but Farah was "green," having only two years of experience as the human resources director of the East Bay database company. The volunteer group also realized that they wanted more information about the company's finances and less hype. This became known around Individuate as "respect." After all, the employees, at least at the time of the merger, had just worked for a company in which they saw the CEO daily and asked him or her whatever they wanted. A new Individuate CEO in early 2000 was exploring expanding and taking the company public, and the employee groups wanted more information about what this meant. Although management had thought it would be "cool" to be one of the hundred best places to work in America, it never met these employee concerns. The company's stock fell, and management time was devoted to the basic objective of steering the company through a rough market. Employee initiatives, like training or sharing financial information, seemed like a diversion. Management even opposed a suggestion box for anonymous suggestions. More importantly, people felt demoralized and began to take jobs elsewhere, easily done in mid-2000. By then, demand had peaked for Individuate's software. The company stopped hiring in late 2000 and downsized in early 2001. Its plans to go public have been shelved. The lesson of the Individuate story seems ambiguous to me. The company seems typical. Its only unusual feature was its goal to be listed as one of the "hundred best companies to work for." Not many companies engaged in such projects. Nevertheless, plenty of Silicon Valley companies in 2000 probably believed that they belonged on that list. I think that most of them, had they pursued that listing, would have discovered, as the consultants warned Farah, that introducing employee consultation into an organization that lacks responsiveness to employee suggestions can create false expectations. What is the solution to this problem? Does the Individuate story show the need for new forms of employee organization in Silicon Valley? Or does it demonstrate the need for old-fashioned employee organization like labor unions? Does it indicate the inevitability of informal modes of representation such as 2002] EMPLOYEE ORGANIZATION IN SILICON VALLEY meetings, volunteer committees, and intranet communication? Or does it merely demonstrate the harm that comes from consulting employees at all? Ambiguity about formal employee organization pervades much of the literature on high-tech employment. The Silicon Valley engineer or manager has symbolized both social isolation and a high level of networking. Scenes of Bill Hewlett, David Packard, Steve Jobs, and Steve Wozniak tinkering in garages update the image of Charles Lindbergh individualism. Similarly, the first character introduced in Robert Bellah's influential book is a Silicon Valley executive named Brian Palmer.2 He stands for devotion to work and family, commitment to individualism, and isolation from any kind of political or social organization.3 By contrast, the managers and engineers in AnnaLee Saxenian's book pushed Silicon Valley ahead of Boston's Route 128 due to their dense network of personal ties with their counterparts at rivals, subcontractors, suppliers, and former employers.4 Nevertheless, neither the isolate nor the networked seem to have much time for formal group membership. Information-labor markets create roles for new labor market intermediaries, like Internet job boards, which match employees to jobs and provide information.5 Do these intermediaries create opportunities for employee organizations, such as old-fashioned unions or some new kind of employee organization? Many people have speculated along these lines or worked to create such new organizations, but so far results are thin on the ground. This article will discuss four kinds of employee organizations and how they relate to information-labor markets like Silicon Valley's. They include network-based employee groups that communicate on computer networks; ethnic and gender-based groups that transcend firm boundaries; other groups organized as caucuses by firms; and new employee groups designed for mobile workers, such as Working Partnerships in San Jose, and Working Today, a New York-based group not yet active in Silicon Valley. These new forms of employee organizations are full of vitality, play 2. See ROBERT N. BELLAH ET AL., HABITS OF THE HEART: INDIVIDUALISM AND COMMITMENT IN AMERICAN LIFE 3-8 (1985) (introducing the Brian Palmer character). 3. Id. 4. See generally ANNALEE SAXENIAN, REGIONAL ADVANTAGE: CULTURE AND COMPETITION IN SILICON VALLEY AND ROUTE 128 (1994) (contrasting the industrial systems between Silicon Valley and Route 128). 5. See David H. Autor, Wiring the LaborMarket, 15 J. EcON. PERSP. 25, 26-30 (2001) (discussing the consequences of the Internet for labor markets). HYDE, supra note *, at ch. 4, discusses the implications of such new labor market intermediaries. The premise of an "information-labor market" is that labor markets with short tenures and weak internal labor markets are markets for information. Individuals may be hired for the information they contribute. One sees network effects, endogenous growth through information spillover, multiple equilibria, increasing returns, as well as start-up firms, job turnover, information intermediaries, flexible compensation. Id. 496 U. PA. JOURNAL OF LABOR AND EMPLOYMENT LAW [Vol. 4:3 interesting roles, and raise policy dilemmas that are best resolved by examining the full picture of this high-velocity labor market. Like other Silicon Valley work practices, they also raise questions at the cutting edge of economic analysis.6 Specifically, they all are institutions of information transmission, also known as "employee voice." They have little bargaining or other labor market power. The economics of institutions of employee voice are not well understood. Yet whether any of them will endure in the new economy is somewhat doubtful, particularly as compared with Internet job boards and websites, and temporary help agencies.7 The question that pervades this entire article is whether an employee-directed organization, which seeks to provide assistance, support, and information to employees, offers any advantage over proprietary organizations that aspire to provide the same services. For lower-compensated employees in the labor market, such as office temps, and perhaps even programmers, none of these new groups is a good substitute for a traditional union. If unionism ever comes to Silicon Valley's high-velocity labor market, it will likely more closely resemble the old-fashioned American construction union. The construction union is the best organization ever devised for a mobile or contingent workforce- so good that one rarely thinks of unionized construction workers as "contingent." Today's temps, product-testers, and low-level programmers, would be much better off with an organization that administered (jointly with employer groups) funds, that paid retirement, health, and vacation benefits, into which employers paid per hour worked, organizations that also trained and certified employees.

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